Again, Washington Tries Higher Taxes - But Will They Cut Deficit?

May 10, 1993|By J. Craig Crawford Sentinel, Washington Bureau

WASHINGTON — Congress is ready to stop talking and start voting this week on one of the biggest tax increases in history.

''I would like to remind members that I want to get this finished as soon as possible,'' House Ways and Means Committee Chairman Dan Rostenkowski, D-Ill., said last week as he cut off a talkative lawmaker during a hearing on Clinton's $300 billion tax boost.

This week Rostenkowski's powerful tax-writing panel is expected to finally approve most of Clinton's five-year plan.

By the end of the month the full House is set to vote, sending Clinton's tax package to the Senate, where it faces stiffer opposition.

The Clinton tax hike could cost Florida residents about $5 billion over the next four years, according to the University of Florida's Bureau of Economic and Business Research.

That's higher than the average bite nationally because Florida has a disproportionate share of upper-income taxpayers and rich retirees who are targeted in Clinton's plan.

On average, taxpayers nationally would pay nearly 25 percent of their family income to the federal government, about 1 percent higher than this year. The wealthiest taxpayers would pay nearly 40 percent, about a 5 percent increase.

Democrats say higher taxes are needed to boost the economy and cut the deficit, the federal government's yearly tide of red ink.

''We're calling for a contribution today so that all of us prosper tomorrow,'' Clinton said in his Feb. 17 speech to Congress unveiling his budget plan.

Whatever you call it, this is what Washington's leaders, Republicans and Democrats alike, have been doing almost without stop since 1940: raising taxes to spend more. In today's dollars (adjusted for inflation) taxpayers sent $66 billion to the federal treasury in 1940. This year they will send $1.1 trillion.

That's an increase of more than 1,500 percent. Meanwhile, Congress has spent $1.58 on new federal programs for every $1 in tax increases.

The result? Growing government and historic federal debt.

Despite Clinton's talk of cutting deficits, his own plan concludes that during his four-year term he would add $1 trillion to the national debt, the accumulation of yearly deficits. That rate of increase is what drove the debt to $4 trillion over the past decade.

How much will your taxes go up if the Democrats get their way?

It's not easy to figure out because Clinton and his tax team have come up with 29 separate increases, each full of exemptions, complex formulas and plenty of loopholes.

One of the few certainties is that the energy tax alone is expected to add about 7.5 cents a gallon to the cost of gas for your automobile. Figuring the overall cost of the energy tax depends on who is talking.

The White House says the average family would pay as little as $11 a year more in gas and home utility costs associated with the energy tax. But critics, such as the National Association of Manufacturers, predict that Clinton's energy tax would add $1,000 to the burden on middle-income Americans.

Put it all together and taxes are certain to rise beginning with families that have an adjusted gross income of $20,000 to $30,000 a year. They would pay about $25 more, depending on how much gas, electricity and other forms of energy they use.

Other taxpayers paying more include those with incomes of $30,000 to $50,000 (up $190 a year); $50,000 to $75,000 (up $430); $75,000 to $100,000 (up $590); $100,000 to $200,000 (up $980); $200,000 or more (up $16,000).

Will the Clinton plan get through Congress? Capitol Hill leaders expect quick sailing through the House, where Democrats heavily outnumber Republicans.

The partisan gap is closer in the Senate, where Republicans do not have the power to talk Clinton's tax plan to death as they did last month with his economic stimulus package.

Democrats learned their lesson in the stimulus fight. No filibusters are allowed under Senate rules governing the tax legislation.

Still, a few Democrats - especially those from oil-producing states - could give a boost to the GOP opposition. They plan to fight Clinton's energy tax, aimed at raising $71 billion over the next five years.

And other Democrats have complained about increasing the taxability of Social Security benefits for the 23 percent of retirees who now pay taxes on their monthly checks.

What do Americans get for their higher taxes? President Clinton says his plan will finally put a handle on the deficit and make the economy grow.

Sound familiar? You've heard it before.

The deficit got bigger than ever after Washington's last panic - the famed 1990 budget deal that resulted in then-President Bush reneging on his campaign promise not to raise taxes.

That year Congress and the White House imposed more than $160 billion in new taxes - then the biggest increase in U.S. history. Taxpayers were persuaded to foot the bill for deficit reduction on the promise that it would finally solve the problem.